Gold Flash Crash Shakes Markets

Gold prices fell over 5% in a sudden market reversal, triggering sharp declines in silver and platinum as traders locked in profits after a record-breaking rally, raising questions about liquidity, volatility and future demand (image source)

Gold plunged more than 5 percent on Tuesday in the steepest single-day fall in more than a decade, sparking a broad sell-off across precious metals as traders moved to lock in profits after an extraordinary 2025 rally that pushed bullion to record highs. Gold futures fell about 5.2 percent to roughly US$4,130 an ounce by Tuesday afternoon after tumbling as much as 6.3 percent from Monday’s peak, according to market reports. Silver and platinum slid sharply as well, falling around 6.7 percent and 7.2 percent respectively, amplifying losses across commodity markets. Analysts cited rapid profit-taking, a firmer US dollar and stretched positioning among retail and institutional investors as the main drivers.

“This was a technical correction after a very robust rally,” said Suki Cooper, commodities analyst at Standard Chartered, noting that the investor base had expanded and many actors were booking gains. Bart Melek of TD Securities described the move as traders stepping aside after a fast-paced run-up that became vulnerable to a sudden reversal. A stronger dollar on Tuesday also made dollar-priced bullion less attractive to overseas buyers, adding downward pressure.

The rout exposed liquidity strains in some markets. Silver’s rally this year, which outpaced gold, left inventories thin in major trading hubs and increased volatility when selling accelerated. Platinum, boosted year-to-date by jewellery and autocatalyst demand, saw steep losses that may ripple through industrial purchasers and hedging programmes.

Precious metals had surged in 2025 on inflation concerns, geopolitical tensions and increased safe-haven demand. Bank of America’s bullish forecast earlier this month projecting US$5,000 an ounce by 2026 underscored the divergent views among large institutions, while other banks offered far lower year-end targets, creating a wide forecast band for gold’s path. Many analysts say the long-term structural case for gold remains intact but expect heightened short-term volatility.

Hedge funds and retail platforms reported heavy trading volumes as stop orders and algorithmic models amplified the decline, turning what began as profit-taking into a shallow panic in certain venues. Some commentators likened the episode to a “flash crash” that revealed how concentrated flows and thin liquidity can steepen moves in even the deepest commodity markets.

“This was a technical correction after a very robust rally.” — Suki Cooper, Standard Chartered.

Traders and fund managers will watch whether the sell-off stabilises as buyers re-enter on lower prices or if momentum trading deepens losses. Key unanswered questions include whether central-bank demand and physical buying from Asia will re-absorb supply, and whether short-term technical selling resets longer-term price expectations.